Economic & Market Bulletin
[July 4, 2005] 

A weekly publication of the Economic Affairs Division of the Ministry of Foreign Affairs
Volume 2:Issue 15 
24^th June 2005 

Indo- Sri Lanka technical talks in New Delhi for CEPA

• Indian and Sri Lankan experts will meet in New Delhi this week for technical discussions towards a fast track approach to the proposed Comprehensive Economic Partnership Agreement (CEPA) between the two nations.

• This is the second round of technical negotiations, the first of which was held in Colombo in May under the direction of the Joint Trade Negotiating Committee (TNC) chaired by the two Secretaries of Trade.

• Under the TNC there are three working groups entrusted with specific focus on Goods, Services, Investment and Economic Cooperation. Talks in New Delhi would be by the representatives of these groups.

• The New Delhi talks would focus on developing an improved Double Taxation Avoidance Treaty in line with greater liberalization envisaged under CEPA. The nominative list under the existing FTA would be reviewed at the New Delhi meeting along with Rules of Origin, standards, customs co-operations etc., which would help develop the existing draft text.  

BIMSTEC FTA – Trade Negotiations Committee meet in Lanka in July 

• The 5^th Trade Negotiations Committee (TNC) meeting of the BIMSTEC countries will held next month in Sri Lanka in the run-up to a Free Trade Agreement.

• Bangladesh, India, Myanmar, Sri Lanka and Thailand formed the regional bloc, BIMSTEC, in 1997 for promotion of economic cooperation among themselves. Bhutan and Nepal joined the group last year. 

• The Government officials expressed optimism that BIMSTEC Free Trade Area framework agreement would come in to effect in July 2006 following negotiations in December, of this year.

• The country also took a moderate line in the Anti Dumping issue and decided to propose prior consultation with Least Developed Country (LDC) members during the period after final finding of anti-dumping investigation and before imposition of anti dumping duty. 

German engineering giant GEZE enters Sri Lanka

• GEZE GmbH, world-renowned manufacturer for building management systems has entered Sri Lanka.As a part of GEZE’s ambitious expansion drive in Asia Pacific GEZE has started its operation in Sri Lanka by appointing a Country Manager to head the Sri Lankan operation.

• GEZE’s Sri Lankan operation will provide all-round support and services to the Sri Lankan construction industry in terms of providing technology know- how as well better after sales service.

• GEZE Sri Lanka office is also planning to set up a distributor network to promote its range of innovative products in Sri Lanka as well in countries like Maldives and Bangladesh in the near future.

• GEZE invests millions in research, development and new technology, making them the pioneers in door and window control systems worldwide. GEZE has been recognized as a company that produces quality products without compromise and was awarded the well sought after certification, DIN ISO 9001, which marks out the company’s quality management. GEZE sets the standard for advanced door and window technology.

India fertilizer firm plans unit in Sri Lanka  

• The Indian Potash Limited (IPL), a fertilizer promotion major headquartered in Chennai, will soon set up a wholly owned subsidiary in Sri Lanka.The company was setting up its first subsidiary in Sri Lanka in view of its cultural affinity and similar soil conditions.

• The company was focusing on the interest of farmers, and using films to educate farmers on scientific water and pesticide management.

• IPL has achieved its all time high in sales in 2004- 05 and was placed number two amongst the fertilizer firms in the country.  

• IPL has invested Rs. 50 crore on port infrastructure alone and may invest in mines abroad in future and looking at setting up more subsidiaries in Myanmar, Afghanistan and SAARC countries.

Alliance between Hayleys and MMBL to enhance FedEx Service

• Mercantile Merchant Bank’s subsidiary Mountain Hawk Express and Hayleys have just entered in to a strategic alliance to form one of the strongest international business logistics clusters. This will be in order to extend the express transport business in Sri Lanka.

• The alliance will be based in the Hayleys Transport Division, with its Shipping, Aviation, Freight Management, Distribution Center, Container Depot and Ship Owning interests.

• FedEx is a fortune 500 company. The Company’s annual turnover was US$ 25 billion. The heights that could be reached through this alliance will set the foundation for the creation of a business logistics powerhouse.

• MMBL is privately held Sri Lanka – US joint venture engaged in private equity and in investment banking activities both in Sri Lanka and abroad. Over the years MMBL has built a divers investment portfolio that ranges from financial services, information technology, business logistics, services to the petroleum industry, trading and property development. This has company’s strong network of partnerships both internationally and locally.  

HNB Lists in Luxembourg  

• Hatton National Bank (HNB), has successfully obtained a listing on the Luxemburg Stock Exchange.  Through this listing HNB will place 1.760,470/- Global Depository Receipts (GDR) in Luxemburg at an issue price of US $ 5.51 per GDR.  

• The above GDRs will represent 17,664,700/- ordinary voting shares or 15% of the Bank’s equity capital.

• This is the first time a Sri Lankan Commercial Bank has raised equity capital by issuing GDRs and obtained a listing in an international stock exchange.  

Textile quota for Sri Lanka under FTA

• India will grant more concessions to Sri Lanka in the apparel and clothing sector under the existing bilateral Free Trade Agreement.  New Delhi has agreed to remove the present annual cap of 1.5 million pieces of clothing per category in the sector.  

• Indian has also agreed to grant 100% duty concessions on 6 million pieces of apparel and clothing items permitted to be imported from Sri Lanka as per the tariff quota agreed to between the two countries.

• A tariffs concession on the 6 million pieces was 75% so far and the tariff concessions on another 2 million pieces would also be increased from 50 – 70%.  

Trinco Port to be redeveloped in a three-part strategy 

• The Sri Lanka Ports Authority (SLPA) has decided to redevelop South Asia’s largest natural harbor, in Trincomalee.

• The land that is available will be developed into three zones.  One zone will be provided for the purpose of tourism where land will be provided for building of hotels and other leisure activities.  The second zone will be for the purpose of an industrial park.  This area will provide space for warehouses, oil tanks and all other port related activities.  The third area will be for relocating several unauthorized dwellings from the land belonging to the SLPA.  

• The Government will also focus on passenger transport operating to and from the Trincomalee Port since the area is a major tourist attraction.